Taking the time to address how your financial affairs will be handled when you are gone can be overwhelming. After all, you are making decisions that affect family, friends and your finances.

For many individuals, the complexities and emotions involved lead them to avoid addressing their estate plan altogether. In fact, surveys in the past from ABC News and the Associated Press indicate that half of all Americans have not completed the most basic estate planning document — a will.

One of the most helpful things that someone can do for their family and beneficiaries is to spell out exactly how they want their estate to be handled, and a critical part of that process is to name an executor.

The executor holds an important job, serving as the quarterback of the estate settlement process, so it is essential to entrust the right person with the job. Keep in mind that serving as the executor for any estate can be a laborious task so be sure that they, too, are prepared for what may be involved.

Duties

Generally, the executor or executrix is appointed with the task of collecting assets and information on beneficiaries, determining and paying legitimate debts or claims against the estate, managing estate assets, filing necessary tax and legal documents while paying all estate or inheritance taxes and, finally, distributing the estate to all beneficiaries. If the probate process sounds time consuming, it is. In fact, according to estate planning attorney Robert F. Muñoz, a partner at Lomurro, Davison, Eastman & Muñoz, “The role of the executor ceases once the probate process ends, usually nine months to a year from the death of the decedent.”

Serving as an executor may also sound technical. While appointing someone with a background in law, finance or accounting is a plus, it is not required. It is more important that they be trustworthy, levelheaded and able to assemble the right team of professionals around them to help.

How to choose

From a spouse or child to a family friend or outsider, there are many factors that may influence the decision. Whom should you choose? Should you name one person or use multiple executors? Robert Muñoz states, “Most people choose their spouse, with an adult child, relative, friend or even a corporate trust company as the contingent executor.” While each circumstance is different, naming the surviving spouse as sole executor can be beneficial so that they have more control over the process as they will be greatly affected by their loss. On the other hand, if the surviving spouse is older, having an adult child, relative or friend named as executor may be necessary. In the event that your first choice for the job is unable to serve or predeceases you, always be sure to name a second choice or contingent executor.

Fees

Since settling an estate requires a great deal of time and effort of the executor, fees can be appropriated for their services. The maximum compensation that can be received may vary from state to state but can be significant.

In New Jersey, an income commission of 6 percent can be assessed on any income the estate earns. Additionally, a “corpus” commission is assessed against the principal of the estate as follows: 5 percent of the first $200,000; 3.5 percent of the excess over $200,000 up to $1 million; and 2 percent of the excess over $1 million.

Keep in mind that it is not mandatory that the executor take the commission. In fact, because the fee is considered taxable income, it may be wise to forgo the commission as executor if they stand to inherit the money anyway.

In addition to specifying how you would like your financial affairs handled, a proper estate plan can also help minimize family conflict that may arise. Using the proper estate planning documents and naming the right executor can help to ensure your wishes are clearly defined and carried out. Since each circumstance is unique, consider speaking to your legal, tax and financial advisers to determine the most appropriate approach for you.